Three Personal Money Matters That You Should Be In Control
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Most Malaysians lose sleep over three major things when it comes to finances: paying off debts, saving for contingencies and planning for retirement. Sometimes it feels like there simply isn’t enough time to achieve it all.
Juggling these three financial rules may seem impossible but for those bold enough to persevere, here’s how you can achieve this world-class balancing act:
You may need the plastic but not the debt
The biggest and most common financial trap that working Malaysians fall into is the credit card debt. Before you even consider building up debt, don’t. However, if it is too late, a good way to quickly pay off your credit card debt is to call your credit card company and negotiate for a payment scheme or to opt for 0% interest balance transfer.
After clearing your debt, keeping the card debt-free will have a positive effect on your credit report. You can take advantage of your credit card interest-free period to avoid raking up huge credits.
Another option to manage your monthly budget better is by using credit cards with easy payment plans. They can help your monthly cash flow by spreading out big expenses you charge on your credit card into smaller monthly instalments without incurring interest charges.
Back up your retirement savings
The earlier you start the more you’ll have by the time you decide to retire. The Employees Provident Fund (EPF) recorded its highest dividend payout of 6.35% for the financial year of 2013, but this has dropped to 5.50% in 2023. Either way, your EPF savings alone may not be enough to sustain your lifestyle throughout your post-employment life.
A good solution to this problem is to voluntarily contribute to a Private Retirement Scheme (PRS). With tax relief and incentive offered for PRS investment you’ll get to save on your tax payments and build a secure retirement nest. It’s really hitting two birds with one stone.
Consider additional protection with retirement annuities. They are a form of investment-linked insurance coverage that can offer a lump sum payout or regular payments to ensure you have a steady stream of income during your retirement years.
Setting up a lifeline of emergency funds
Ideally, everyone should have an emergency fund saved up for unfortunate events, such as loss of job and sickness. This emergency fund is essential to sustaining your lifestyle if you were to end up unemployed for any reason.
Though the general rule of thumb for a contingency plan is three months’ salary, the amount you need really depends on the kind of lifestyle you want to continue to lead and how you approach personal finance. Generally, the more you have saved for emergencies, the better.
Read More: How Long Does It Take To Save Enough In Your Emergency Fund?
As difficult and tedious as balancing debt, savings and retirement can be, it is an immensely rewarding experience with a satisfying end result – a life that is financially stable and secure when it needs to be – a testament to your independence and discipline.
